Paxton Products Has Three Product Lines: A, B, and C

question 8

Multiple Choice

Paxton Products has three product lines: A, B, and C. Management is considering dropping product line B. In order for the dropping of product line B to not cause an overall decrease in profits, product line B's avoidable fixed costs should be at least:

• A) $40,000.
• B) $30,000.
• C) $10,000.
• D) $70,000.

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Definitions:

Day-To-Day Activities

The regular, everyday tasks or operations that are essential to the functioning of a business or individual.

Unlimited Liability

A legal structure in which the business owners are personally responsible for all of the company's debts and obligations.

General Partnership

A partnership that involves a complete sharing in both the management and the liability of the business.